Fed Raises Rates for First Time Since 2023, Defying Trump Amid Persistent Inflation

On Wednesday the Federal Open Market Committee voted unanimously to raise the benchmark federal funds rate by a quarter-percentage point, moving the target range to 3.75 %–4.00 %. This is the first hike since 2023 and comes with projections for at least one more increase before the end of 2026. Short-term Treasury yields rose sharply, the dollar strengthened, and equity indexes slipped modestly.

Bloomberg

Inflation has stayed above the Fed’s 2 % target for more than five years. Core price pressures have been amplified by higher energy costs after the U.S.–Israel war with Iran that began in early 2025 and by a surge in corporate borrowing tied to artificial-intelligence investments. After a series of rate cuts through 2024-2025, the Fed kept policy steady at the start of 2026 while monitoring these developments.

Fed raises rates and points to another hike this year

• Two-year Treasury yield climbed to roughly 4.73 %, the highest level since 2024.

CNN

• The 10-year yield hovered near 5 %, its highest closing level since 2007.

CNN

• The Fed’s preferred personal consumption expenditures (PCE) price index was 3.7 % in July, with core PCE at 3.3 %.

Euronews

• The unemployment rate held steady at 4.1 % and job gains kept pace with workforce growth.

Fed Raises Rates Quarter Point As Inflation Remains Elevated / Fresh Today / CUToday.info

The FOMC statement highlighted a “solid pace” of economic activity, resilient domestic spending, and strong productivity and capital investment.

Euronews

President Donald Trump condemned the hike, arguing that lower rates are essential for U.S. competitiveness and warning of possible trade measures if the Fed does not comply. His top economic adviser Kevin Hassett said the White House would “understand and respect the decision,” underscoring the political clash over monetary-policy independence.

Channel News Asia - CNA

• “At this stage, it would be very difficult for the Fed to leave rates unchanged this week without eroding its inflation-fighting credibility,” — Vail Hartman, US rates strategist at BMO Capital Markets

CNN

The Fed’s Summary of Economic Projections shows a majority of officials expecting at least one more 0.25-point increase before year-end, with some forecasting two. Market pricing from CME Group indicates a roughly 38 % probability of two additional hikes by December. Traders will watch upcoming FOMC meetings and inflation data for cues on the timing of further tightening.

Bloomberg